Report to the Honorable Ron Wyden, 

U.S. Senate 

United States General Accounting Office 

GAO 

June 2003 TECHNOLOGY 

TRANSFER 

NIH-Private Sector 

Partnership in the 

Development of Taxol 

GAO-03-829 
Page i GAO-03-829 Technology Transfer in Taxol Development 

Letter 1

Results in Brief 3

Background 5

NIH-BMS Partnership Provided Research Results Critical to 

Developing Taxol’s Commercial Uses 10

NIH Invested Heavily in Taxol-Related Research, but Federal 

Financial Benefits Have Been Limited 13

Several Factors Affected NIH’s Exercise of Its Broad Authority in 

Technology Transfer Activities Related to the Development of 

Taxol 18

Concluding Observations 20

Agency and Bristol-Myers Squibb Company Comments and Our 

Evaluation 21

Appendix I Selection of “Clinical Development of Taxol” 

CRADA Partner 23 

Appendix II Catalog of CRADAs and License Agreements 

Related to Taxol 24 

Appendix III Chronology of the Research and Development of 

Taxol (Paclitaxel) 26 

Appendix IV Comments from the National Institutes of Health 29 

Appendix V GAO Contact and Staff Acknowledgments 35 

GAO Contact 35

Acknowledgments 35

Contents 
Page ii GAO-03-829 Technology Transfer in Taxol Development 

Tables 

Table 1: BMS’s Worldwide Taxol Sales, 1993-2002 16

Table 2: CRADAs Related to Taxol 24

Table 3: Patents Related to Taxol 25

Figure 

Figure 1: NIH’s Funding for Paclitaxel-Related Research 14

Abbreviations 

AWP average wholesale price 

BMS Bristol-Myers Squibb Company 

CRADA cooperative research and development agreement 

FDA Food and Drug Administration 

FSU Florida State University 

FSS Federal Supply Schedule 

IND investigational new drug application 

NCI National Cancer Institute 

NDA new drug application 

NIH National Institutes of Health 

OFM Office of Financial Management 

OTT Office of Technology Transfer 

PHS Public Health Service 

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Page 1 GAO-03-829 Technology Transfer in Taxol Development 

June 4, 2003 

The Honorable Ron Wyden 

United States Senate 

Dear Senator Wyden: 

The transfer of technology resulting from federally funded research to the 

private sector is intended to bring pharmaceuticals to the marketplace 

much sooner and more efficiently than would have been possible for a 

federal agency acting alone. Much of the pharmaceutical-related 

technology transfer between the public and the private sectors originates 

with research conducted or funded by the National Institutes of Health 

(NIH). NIH uses mechanisms such as cooperative research and 

development agreements (CRADA) with industry partners and the 

licensing of patented inventions arising from research it funds to provide 

incentives for businesses to develop pharmaceuticals. However, the 

financial success of certain drugs that have benefited from governmentfunded research has raised concerns about whether the federal 

government is getting a fair return on its investment in the research 

leading to these products. 

An example of pharmaceutical technology transfer is Taxol (paclitaxel), 

which by 2001 had become the best-selling cancer drug in history.1

 Taxol 

was commercialized by the Bristol-Myers Squibb Company (BMS). 

Through a collaboration with NIH, BMS benefited from substantial 

investments in research conducted or funded by NIH. In this instance, the 

NIH research examined the safety and effectiveness of this naturally 

occurring compound for the treatment of cancer and resulted in 

techniques for administering the drug. NIH transferred its research results 

and discoveries to BMS for its use in seeking approval from the Food and 

Drug Administration (FDA) to market the drug. 

 1

Paclitaxel is the name of the generic equivalent of Taxol. The drug was known as taxol 

from its discovery in the 1960s until 1992, when BMS trademarked the name Taxol. At that 

time, BMS objected to researchers using taxol as the generic name, and so it was changed 

to paclitaxel. In this report, we use the name Taxol to refer to the brand-name drug sold by 

BMS, and we use paclitaxel to refer to the drug in other contexts. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-03-829 Technology Transfer in Taxol Development 

You asked us to examine the legal and financial issues involved in 

technology transfer as illustrated by the case of the research, 

development, and commercialization of Taxol. Specifically, you asked us 

to examine the following questions: (1) How did the NIH-BMS technology 

transfer collaboration affect the research and development of Taxol? 

(2) What was NIH’s financial investment in Taxol-related research, and 

what were the financial outcomes of the technology transfer process 

related to Taxol? (3) What factors influenced how NIH exercised its 

authority in Taxol-related technology transfer activities? 

To address these questions, we reviewed published and unpublished 

documents describing NIH and BMS’s partnership and their efforts to 

research and develop Taxol. Using the U.S. Patent and Trademark Office’s 

database, we reviewed the patent history of Taxol. We reviewed the 

primary Taxol-related CRADA between NIH and BMS, which was signed in 

1991. We also reviewed an additional Taxol-related CRADA and the license 

agreement between NIH and BMS.2

 We interviewed the principal 

investigators associated with those CRADAs to understand the research 

involved. To assess NIH’s investments and financial outcomes resulting 

from Taxol-related research, we obtained and reviewed data from NIH’s 

National Cancer Institute (NCI), Office of Financial Management (OFM), 

and BMS’s Annual Reports.3

 We also reviewed Medicare drug purchase 

data from the Medicare part-B Extract Summary System and pricing data 

from the Federal Supply Schedule (FSS). We interviewed officials from 

BMS and from NIH’s OFM, Office of Technology Transfer (OTT), and NCI 

about spending estimates and the use of royalty payments. To assess the 

factors that influence how NIH exercises its legal authority, we reviewed 

the relevant statutes and regulations pertaining to the technology transfer 

process and interviewed pertinent officials involved in the process at NIH 

and BMS. We also interviewed officials from one of NIH’s key partners in 

paclitaxel-related research, Florida State University (FSU), where much of 

the early research on a semisynthetic method of producing paclitaxel was 

performed. The scope of our report was restricted to NIH’s investment in 

paclitaxel, and we did not evaluate the effectiveness of commercializing 

Taxol in comparison to other drugs. For this reason, we consider the 

implications of the development of Taxol as a case study, not necessarily 

 2

BMS voluntarily agreed to the disclosure of its commercial information in the CRADAs 

and the license agreement so that our study could be completed and the results of our 

review could be made publicly available. 

3

Throughout the report, dollars are reported as actual dollars, not adjusted for inflation. 
Page 3 GAO-03-829 Technology Transfer in Taxol Development 

as representative of the way NIH performs technology transfer activities. 

We conducted our work from October 2002 to June 2003 in accordance 

with generally accepted government auditing standards. 

NIH’s collaboration with BMS provided the company with research results 

that enabled paclitaxel to be quickly commercialized as the brand-name 

drug Taxol and made available as a treatment—initially for ovarian cancer 

patients, and later for other cancer patients. Prior to the signing of the 

1991 CRADA between NIH and BMS, and during the first 2 years of the 

CRADA, NIH conducted most of the clinical trials associated with 

paclitaxel. The results of NIH’s clinical trials were critical for BMS to 

secure FDA’s initial approval in 1992 to market Taxol for the treatment of 

advanced ovarian cancer. Five of the six studies submitted to FDA by BMS 

in support of its marketing application were either conducted or funded by 

NIH. As agreed in the CRADA, BMS supplied paclitaxel to NIH researchers 

to overcome previous shortages that had limited NIH’s research. The 

additional paclitaxel supplied by BMS allowed NIH researchers to increase 

the number of patients enrolled in NIH clinical trials for paclitaxel from 

less than 500 patients in 1989 to 28,882 through the end of the CRADA 

term. Three inventions—which were methods for administering paclitaxel 

and treating side effects—resulted from the 1991 CRADA and were later 

patented by NIH. In 1996 NIH signed an agreement to license these 

inventions to BMS, but BMS officials told us that they were not used in any 

of BMS’s applications to FDA to expand the approved uses of Taxol. In 

addition, an NIH grant to FSU led to the important discovery of a method 

for producing paclitaxel, which was licensed to BMS by FSU in 1990 and 

later used to produce Taxol. 

NIH made substantial investments in research related to Taxol, but its 

financial benefits from the collaboration with BMS have not been great in 

comparison to BMS’s revenue from the drug. NIH estimates that it invested 

$183 million in research related to paclitaxel from 1977 through 1997, the 

end of the CRADA’s term, although not all of this was for research 

supporting the 1991 CRADA. For one portion of its investment in Taxol, 

NIH estimates that its net cost for conducting clinical trials that supported 

the development of Taxol through the 1991 CRADA was $80 million—NIH 

estimates that it spent $96 million on the studies, and this expense was 

offset by $16 million in financial support from BMS. We estimate that the 

paclitaxel BMS supplied NIH through the CRADA had a value of $92 

million. NIH spent an additional $301 million on paclitaxel-related 

research from 1998 through 2002, some of which supported cancer 

research, bringing NIH’s total investment in paclitaxel-related research 

Results in Brief 
Page 4 GAO-03-829 Technology Transfer in Taxol Development 

from 1977 to 2002 to $484 million. Overall, BMS officials told us that the 

company spent $1 billion to develop Taxol. BMS’s worldwide sales of 

Taxol totaled over $9 billion from 1993 through 2002. In its 1996 license 

agreement with NIH, BMS agreed to pay NIH royalties at a rate of 0.5 

percent of worldwide sales of Taxol, and NIH received royalty payments 

totaling $35 million through 2002. The CRADA noted NIH’s concern that 

Taxol be fairly priced given the public investment in Taxol research and 

the health needs of the public, but it did not require that reasonable 

evidence be presented to show that this would occur. The federal 

government has been a major payer for Taxol, primarily through Medicare. 

Medicare payments for Taxol totaled $687 million from 1994 through 1999, 

the last full year before a generic version of Taxol was approved for 

marketing. 

Several factors affected NIH’s exercise of its authority in technology 

transfer activities related to the development of paclitaxel. First, in 

negotiations regarding a CRADA for paclitaxel, NIH’s ability to exercise its 

authority was limited because, even though its research findings could be 

valuable in securing FDA approval for marketing the drug, NIH did not 

have a patent on paclitaxel, and thus could not grant a possible CRADA 

partner an exclusive patent license to market the drug upon FDA approval. 

Second, NIH’s evaluation suggests that there was a shortage of available, 

qualified alternative CRADA partners. According to NIH’s records, BMS’s 

CRADA application scored significantly higher than others. Finally, the 

negotiation of royalties for NIH’s later Taxol-related inventions was 

affected by multiple considerations, including the priorities that both NIH 

and BMS assigned to different factors in the setting of royalties. While 

nothing in applicable law restricts the amount of royalties NIH can 

negotiate, a number of considerations bear on the negotiations. These 

include the stage of product development, the potential market value of 

the invention, and the contribution to public health of making the product 

available. In this case, BMS officials told us that NIH’s inventions did not 

contribute to BMS’s successful marketing of Taxol. 

In commenting on a draft of this report, NIH provided additional 

information about its expenditures and the contributions of BMS, which 

we incorporated, and also discussed its efforts to evaluate the pricing of 

Taxol. In its comments on a draft of this report, BMS expressed concern 

about our estimates of NIH’s expenditures; we have revised our 

presentation based on information contained in NIH’s comments. BMS 

also expressed concerns that our analysis overstated the cost of Taxol to 

Medicare. Our analysis did not overstate the cost, and we have clarified 

our discussion. 
Page 5 GAO-03-829 Technology Transfer in Taxol Development 

Taxol is currently used to treat several types of cancer, including 

advanced ovarian and breast cancer, certain lung cancers (non-small cell) 

in patients who cannot have surgery or radiation therapy, and AIDSrelated Kaposi’s sarcoma. The bioactive compound in Taxol was first 

extracted from the bark of the slow-growing Pacific yew tree Taxus 

brevifolia in the 1960s. Following this discovery, the drug was developed 

primarily through research funded by NIH, and then transferred to the 

private sector and successfully commercialized by BMS. 

The 1991 NIH-BMS CRADA was one of the first CRADAs to result in a 

breakthrough drug. The groundwork for the public-private partnership 

that fostered the success of Taxol was laid in 1980. Prior to that time, the 

government generally retained title to any inventions created under federal 

research grants and contracts. This situation became a source of 

dissatisfaction because of a general belief that the results of governmentowned research were not being made widely available for the public’s 

benefit. For example, there were concerns that biomedical and other 

technological advances resulting from federally funded research at 

universities were not leading to new products because the universities had 

little incentive to seek uses for inventions to which the government held 

title. In 1980, the Congress passed two landmark pieces of legislation—the 

Stevenson-Wydler Technology Innovation Act of 19804

 and the Bayh-Dole 

Act5

—with the intent of promoting economic development, enhancing U.S. 

competitiveness, and benefiting the public by encouraging the 

commercialization of technologies developed with federal funding. 

Although the acts have common objectives, the Stevenson-Wydler Act 

focuses on inventions owned by the federal government, while the BayhDole Act focuses on inventions created under federal contracts, grants, 

and cooperative research and development agreements. Under the 

Stevenson-Wydler Act, inventions owned by the government remain the 

property of the agencies that produce them. However, the act as amended 

sets out guidelines and priorities that encourage commercialization of 

these inventions through the licensing of technology to U.S. business. In 

1986 the Federal Technology Transfer Act6

 amended the Stevenson-Wydler 

 4

Pub. L. No. 96-480, 94 Stat 2311. 

5

Pub. L. No. 96-517, § 6(a), 94 Stat. 3019. 

6

Pub. L. No. 99-502, 100 Stat. 1785. 

Background 

Public-Private Technology 

Transfer 
Page 6 GAO-03-829 Technology Transfer in Taxol Development 

Act and enhanced the authority of federal agencies in this area, 

authorizing them to enter into CRADAs with nonfederal partners to 

conduct research. 

The Bayh-Dole Act authorizes federal agencies to execute license 

agreements with commercial entities to promote the development of 

federally owned inventions, and to collect royalties for such licenses. The 

act also gives small businesses, universities, and other nonprofit 

organizations the right to retain title to and profit from the inventions 

arising from their federally funded research, provided they adhere to 

certain requirements. In 1983, a presidential memorandum extended this 

patent policy to large businesses. The act also contains several provisions 

to protect the public’s interest in commercializing federally funded 

inventions, such as a requirement that a contractor or grantee that retains 

title to a federally funded invention file for patent protection and attempt 

commercialization. In return, the government retains the right to use the 

inventions without paying royalties. In general, most biomedical 

inventions are not a final end product; therefore the government rights 

would not extend to a final product. 

NIH, with a budget of over $23 billion in fiscal year 2002, is the principal 

federal agency that conducts and funds biomedical research, including 

research on drugs. Within NIH, OTT is responsible for licensing the 

inventions of NIH employees to the private sector for development to 

benefit the public health. OTT oversees patent prosecution, negotiates and 

monitors licensing agreements, and provides oversight and central policy 

review of CRADAs.7

 NIH’s stated goals with regard to the technology 

transfer process are, in order of priority, to foster scientific discoveries, to 

facilitate the rapid transfer of discoveries to the bedside, to make resulting 

products accessible to patients, and to earn income. NIH has broad 

authority under the statutes described above to negotiate agreements with 

outside partners in pursuit of its technology transfer goals. 

NIH scientists and laboratories, scientists and laboratories in academia or 

other research institutions that receive public funding, and industry 

researchers are often all involved in the development of pharmaceuticals. 

 7

OTT also manages the patent and licensing activities for FDA and is responsible for the 

central development and implementation of technology transfer policies for NIH, FDA, the 

Centers for Disease Control and Prevention, and the Agency for Healthcare Research and 

Quality. 

NIH’s Role in Technology 

Transfer 
Page 7 GAO-03-829 Technology Transfer in Taxol Development 

Usually, government and academic scientists conduct basic research on 

the biology of a disease and identify compounds, methods, and chemical 

reactions and pathways that may be of value in treating disease. They also 

conduct preclinical and clinical testing of drugs (phase 1 and 2 trials). 

Industry conducts more extensive clinical trials (phase 3 trials) and 

markets the drugs, although there is some overlap in these roles.8

 NIH’s 

overall mission and authority, as well as the requirements of the Federal 

Food Drug and Cosmetic Act, suggest that NIH cannot sponsor a drug 

through FDA’s new drug application (NDA) process. This act requires 

those who submit NDAs to FDA to provide “a full description of the 

methods used in, and the facilities and controls used for, the manufacture, 

processing, and packing, of such drug.”9

 While NIH conducts its own 

research and funds biomedical research at other institutions, it does not 

have a manufacturing, processing, or packing facility. 

NIH can, however, license inventions directly to pharmaceutical firms 

without the necessity of working through a CRADA. For example, NIH 

officials told us that of the 16 drugs and vaccines currently approved by 

FDA that contain an NIH technology, only 3 involved a CRADA. To attract 

private-sector partners, NIH publicizes the availability of technologies that 

it seeks to license directly. NIH officials told us that it has entered into 

CRADAs with private-sector partners in at least two other cases that were 

similar to paclitaxel—naturally occurring substances for which shortages 

had limited NIH’s ability to conduct research. 

The Public Health Service (PHS) created a model CRADA because the 

Federal Technology Transfer Act of 1986 provided few specifics about the 

CRADA process. In general, the model CRADA sets forth the policies of 

NIH and other PHS agencies on various aspects of cooperative research 

and intellectual property licensing that derive from the Federal 

Technology Transfer Act. The model CRADA has been updated several 

times over the years. The 1991 CRADA between NIH and BMS referred to a 

March 27, 1989, version of the model CRADA. The 1989 model CRADA 

stated that NIH would be willing to grant exclusive licenses to its CRADA 

 8

Phase 1 studies of an investigational new drug for cancer are generally conducted in a 

small group of cancer patients to test for safety; phase 2 studies are generally conducted to 

test for safety and effectiveness in several hundred patients who have the condition under 

investigation; and phase 3 studies, which are performed after preliminary evidence 

suggesting effectiveness has been obtained in phase 2 trials, may include several hundred 

to several thousand people. 

9

21 U.S.C. § 355(b)(1)(D) (2000). 
Page 8 GAO-03-829 Technology Transfer in Taxol Development 

collaborators. The 1989 model CRADA also contained a provision known 

as the “reasonable price clause.” It stated that PHS has “a concern that 

there be a reasonable relationship between the pricing of a licensed 

product, the public investment in that product, and the health and safety 

needs of the public. Accordingly, exclusive commercialization licenses 

granted for [NIH] intellectual property rights may require that this 

relationship be supported by reasonable evidence.” NIH dropped the 

reasonable pricing clause in 1995, and the current version of the model 

CRADA no longer has any stipulation regarding the pricing of products 

that are developed under the CRADA. 

Under federal law and NIH policy, royalty income from license agreements 

is shared between the inventors and the institute or center within NIH in 

which the technology was developed. NIH uses the royalties for multiple 

purposes that contribute to the technology transfer program and the 

research of its laboratories. Specifically, the royalty payments can be used 

to (1) reward employees of the laboratory, (2) further scientific exchange 

among the laboratories of the agency, (3) educate and train employees of 

the agency or laboratory, (4) support other activities that increase the 

potential for transfer of the technology of the laboratories of the agency, 

(5) pay expenses incidental to the administration and licensing of 

intellectual property by the agency or laboratory, and (6) support scientific 

research and development consistent with the research and development 

missions and objectives of the laboratory. 

Federal laws also generally prohibit agencies from disclosing information 

that concerns or relates to trade secrets, processes, operations, statistical 

information, and related information.10 Therefore the federal technology 

transfer process that NIH engages in with the private sector is not entirely 

transparent to the general public, nor are the details of the negotiations 

and agreements that NIH makes with industry partners publicly known. 

However, information may be disclosed to those who have oversight 

authority over the agencies that generate such information, such as the 

Congress and its oversight bodies. In this way, information about the 

details of the federal investment and return on investment in the 

commercialization of a drug like Taxol can be examined for policymaking 

purposes. 

 10See 15 U.S.C. § 3710a(c)(7); 18 U.S.C. § 1905 (2000). See Public Citizen v. NIH, 209 F. 

Supp. 2d 37 (D.D.C. 2002), see also, 5 U.S.C. § 552(b)(4) (2000), which exempts trade 

secrets, and commercial and financial information that is privileged or confidential, from 

public disclosure. 
Page 9 GAO-03-829 Technology Transfer in Taxol Development 

NIH played a role in both basic and clinical research leading to the 

development and use of Taxol. In 1958, NCI, a component of NIH, initiated 

the Natural Products Program, which screened 35,000 plant species for 

anticancer activity. Researchers at the Research Triangle Institute found 

that an extract from the bark of the Pacific yew tree had antitumor activity 

in 1963 and isolated the compound paclitaxel in the bark of the Pacific 

yew in 1971. In 1979, scientists at Albert Einstein College of Medicine 

discovered how paclitaxel works to prevent cell division. 

In 1983, NCI filed an investigational new drug application (IND) with FDA 

to initiate clinical trials of paclitaxel. The IND was approved, and phase 1 

trials began. In 1985, NCI began funding phase 2 clinical trials. By 1989, 

two studies of paclitaxel’s effect on ovarian cancer had demonstrated 

positive results. 

In August 1989, NIH announced in a Federal Register notice that it was 

seeking a pharmaceutical company that could develop paclitaxel to a 

marketable status.11 The notice stated that paclitaxel could not be 

patented. Instead, NIH offered a potential CRADA partner the exclusive 

rights to the source data from its clinical trials. Although 20 commercial 

firms replied to the announcement, only 4 companies, BMS among them, 

decided to apply for the CRADA opportunity. 

NIH chose BMS as its CRADA partner, and the CRADA, “Clinical 

Development of Taxol,” took effect on January 23, 1991. (For details on 

the CRADA partner selection process, see app. I.) Under the 1991 CRADA, 

NCI and BMS agreed to collaborate on ongoing and future clinical studies 

to obtain FDA approval for the marketing of paclitaxel, and NCI would 

make available exclusively to BMS the data and the results of all paclitaxel 

studies. As part of the CRADA, BMS was to supply NCI with sufficient 

amounts of paclitaxel for research and clinical trials. NCI could terminate 

the agreement if BMS “failed to exercise best efforts in the 

commercialization of taxol [paclitaxel].” Following this first Taxol-related 

CRADA, NIH entered into another CRADA with BMS in 1998 and has had 

other paclitaxel-related CRADAs with two other companies (see app. II). 

In 1991, a phase 2 trial of paclitaxel demonstrated its effectiveness in 

treating breast cancer. In 1992, BMS filed and received approval for 

trademark protection for the name Taxol. Also in 1992, BMS filed an NDA 

 1154 Fed. Reg. 31733 (1989). 

The Development of Taxol 
Page 10 GAO-03-829 Technology Transfer in Taxol Development 

for Taxol with FDA. On December 29, 1992, FDA approved Taxol for the 

treatment of ovarian cancer, an indication for which it had been shown to 

be effective in earlier studies. In January 1993, Taxol was introduced into 

the marketplace by BMS for the treatment of ovarian cancer. 

FDA’s approval of BMS’s NDA to market Taxol for the treatment of 

ovarian cancer triggered a provision in federal law granting BMS 5 years of 

marketing exclusivity for Taxol as a new chemical entity under the Drug 

Price Competition and Patent Term Restoration Act of 1984.12 The statute 

provides marketing protection for unpatentable pharmaceuticals, stating 

that during this 5-year period “no application...may be submitted” to FDA 

that “refers” to the approved drug, a provision that generally prohibits the 

introduction of a generic drug during the exclusivity period.13 Prior to the 

expiration of this period, in June 1997, BMS received two patents 

regarding the administration of Taxol. In July 1997, a number of generic 

drug manufacturers filed applications with FDA to market a generic 

version of paclitaxel, and notified BMS of their intent. BMS then filed suit 

in a federal district court alleging violations of its most recent patents. 

Under federal law, this granted BMS an additional 30 months of marketing 

exclusivity while the issues were being resolved in court.14 (See the 

chronology in app. III for more information on the research and 

development of Taxol.) 

The NIH-BMS collaboration provided BMS access to NIH research results 

that were critical for BMS’s quick commercialization of Taxol. It provided 

other benefits for both parties and for the health of the public as well. BMS 

supplied paclitaxel to NIH, enabling NCI to dramatically expand its 

paclitaxel research. BMS later licensed three NIH inventions that resulted 

from the CRADA; however, BMS ultimately decided not to use any of the 

inventions in its applications to FDA for approval to market Taxol for 

additional indications. An NIH grant led to the important discovery of a 

method for the semisynthesis of paclitaxel by FSU researchers. 

 12Pub. L. No. 98-417, 98 Stat. 1585. 

1321 U.S.C. § 355(c)(3)(D)(ii) (2000). See H.R.Rep. No. 98-857, pt. 1, at 29 (1984), reprinted 

in 1984 U.S.C.C.A.N. 2647, 2647-48, 2662. 

1421 U.S.C. § 355(j)(5)(B)(iii) (2000). In theory, a company could choose to waive its right to 

marketing exclusivity. In the case of Taxol, NIH and BMS could have agreed to such a 

waiver during CRADA or licensing negotiations, but we are not aware of such discussions. 

NIH-BMS Partnership 

Provided Research 

Results Critical to 

Developing Taxol’s 

Commercial Uses 
Page 11 GAO-03-829 Technology Transfer in Taxol Development 

The NIH-BMS collaboration gave BMS unlimited access to NIH research 

results that were critical to BMS’s ability to quickly receive FDA approval 

to market Taxol. BMS submitted an NDA for paclitaxel to FDA on July 21, 

1992, 18 months after the 1991 CRADA took effect, and FDA approved the 

drug for initial marketing on December 29, 1992. Paclitaxel was one of the 

first oncological compounds tested by NCI, and the public health 

community was highly interested in exploring its potential. The 

collaboration between NIH and BMS was beneficial to BMS because it 

gained access to the results of NIH’s basic, preclinical, and clinical 

research studies related to paclitaxel, including NIH studies conducted 

both prior to and during the term of the CRADA. Prior to the signing of the 

1991 CRADA, and during the first 2 years of the CRADA, NCI conducted 

most of the clinical trials associated with paclitaxel. These studies were 

important for securing FDA’s initial approval to market Taxol for the 

treatment of advanced ovarian cancer. Five of the six studies submitted to 

FDA by BMS in support of its marketing application were either conducted 

or funded by NIH; one was conducted by BMS.15 BMS subsequently applied 

to FDA to market Taxol for other indications, including metastatic breast 

cancer and AIDS-related Kaposi’s sarcoma. BMS has received FDA 

approval to market Taxol for eight indications as of May 12, 2003. 

Under the terms of the 1991 CRADA, BMS supplied paclitaxel for NCI’s 

own studies as well as for NCI-funded trials at other institutions that were 

initiated pursuant to the CRADA. Three months after the CRADA was 

signed, BMS began shipments of paclitaxel to NIH. BMS reported that by 

the end of 1991, 1.35 kilograms of bulk drug, or 45,000 vials, had been 

delivered. In January 1992, shipments were increased from 5,000 vials per 

month to 25,000 vials per month, and by April 50,000 vials per month were 

being provided at no charge to NIH. 

BMS’s shipments of paclitaxel overcame shortages that had limited NCI 

research. In 1989, before the CRADA, a cumulative total of fewer than 500 

patients had been treated with paclitaxel. Because of BMS’s efforts to 

expand the collection and production of paclitaxel, NCI was able to 

establish more than 40 treatment referral centers for therapy of patients 

with refractory ovarian cancer (previously treated, unresponsive ovarian 

cancer) and breast cancer. According to NCI, 28,882 patients were treated 

 15BMS officials told us that the number of patients in the five NCI trials and the one BMS 

trial were very similar (186 and 159 patients, respectively). 

NIH-BMS Collaboration 

Gave BMS Access to 

Critical Research Results 

NIH-BMS Collaboration 

Allowed NIH to Expand Its 

Paclitaxel Research 
Page 12 GAO-03-829 Technology Transfer in Taxol Development 

in its clinical trials over the course of the CRADA, and the paclitaxel was 

supplied free of charge by BMS to NCI for use in both the clinical trials 

and the treatment centers. 

In 1996, NIH signed an agreement to license to BMS three patented 

paclitaxel-related inventions that resulted from the 1991 CRADA. While 

the compound itself was not patented, NIH patented three methods for 

using paclitaxel in cancer treatment. These inventions were (1) use of GCSF (granulocyte colony-stimulating factor) to avoid the side effects of 

using Taxol in higher doses, (2) a 96-hour infusion method to overcome 

multidrug resistance, and (3) a method for using Taxol in combination 

with another drug (cisplatin). BMS licensed these three inventions 

because it thought they had potential to provide important contributions 

to treatment. BMS considered adding these methods as new indications to 

the Taxol product label, but ultimately decided not to use any of the 

inventions in its applications to FDA for approval to market the drug. 

The supply of natural paclitaxel was a continuing problem, since the bark 

of the Pacific yew was scarce and it took about 10,000 to 30,000 pounds of 

dried bark to produce about 1 kilogram of the compound.16 Under the 

terms of the 1991 CRADA, BMS agreed to initiate an aggressive search for 

alternative sources of paclitaxel to lessen or eliminate dependence on the 

Pacific yew. Prior to the signing of the CRADA, however, NCI had funded 

research at FSU that led to the development of a semisynthetic process for 

producing paclitaxel that started the manufacturing process with materials 

from another type of yew tree that was plentiful. NIH provided about 

$2 million in funding to FSU for this research. Researchers at FSU 

patented the semisynthesis process in 1989 and subsequently licensed the 

patent to BMS in 1990. Under the terms of the license agreement, BMS 

paid FSU substantial royalties for this patent in order to increase the 

 16In response to the demand for Pacific yew bark, the Pacific Yew Act was enacted in 1992. 

The purposes of the Pacific Yew Act are to (1) provide for the efficient collection and 

utilization of those parts of the Pacific yew that can be used in the manufacture of 

paclitaxel for the treatment of cancer, (2) provide for the sale of Pacific yew for the 

commercial production and sale of paclitaxel at a reasonable cost to cancer patients, 

(3) ensure the long-term conservation of the Pacific yew, and (4) prevent the wasting of 

Pacific yew resources while successful and affordable alternative methods of 

manufacturing paclitaxel are being developed. Pub. L. No. 102-335 § 2(b), 106 Stat. 859-860. 

NIH Licensed Inventions 

from CRADA to BMS 

NIH Funding Supported 

Development of 

Semisynthesis Process for 

Producing Paclitaxel 
Page 13 GAO-03-829 Technology Transfer in Taxol Development 

supply of Taxol.17 BMS officials told us that BMS did not start using the 

FSU invention to manufacture Taxol until 1996. 

Although NIH estimates that it has invested heavily in research related to 

paclitaxel, its financial benefits from the collaboration with BMS have not 

been great in comparison to BMS’s revenue from the drug. NIH estimates 

that it has invested $183 million in research related to paclitaxel from 1977 

through 1997, the end of the CRADA’s term, although not all of this was for 

research supporting the 1991 CRADA. For one portion of its investment in 

Taxol, NIH estimates that its net cost for conducting clinical trials that 

supported the development of Taxol through the 1991 CRADA was 

$80 million—NIH estimates that it spent $96 million on the studies, and 

this expense was offset by $16 million in financial support from BMS. We 

estimate that the paclitaxel BMS supplied NIH through the CRADA had a 

value of $92 million. In addition, NIH spent an additional $301 million on 

paclitaxel-related research from 1998 through 2002, some of which 

supported cancer research, bringing NIH’s total investment in paclitaxelrelated research from 1977 to 2002 to $484 million. Overall, BMS officials 

told us that the company spent $1 billion to develop Taxol. Worldwide 

sales of Taxol have totaled over $9 billion through 2002. As a result of its 

license agreement with BMS, NIH has received $35 million in royalty 

payments. The 1991 CRADA noted NIH’s concern that Taxol be fairly 

priced given the public investment in Taxol research and the health needs 

of the public, but it did not require that reasonable evidence be presented 

to show that this had occurred. The federal government has been a major 

payer for Taxol, primarily through Medicare. For example, Medicare 

payments for Taxol totaled $687 million from 1994 through 1999. 

 17BMS officials declined to disclose the amount of the Taxol-related royalties BMS paid to 

FSU. However, we estimate that FSU received a royalty rate of approximately 4.2 percent 

of BMS’s total worldwide sales of Taxol. For example, FSU’s Office of Technology Transfer 

website reported that FSU received $67 million in royalties in 2000 and an FSU official told 

us that 98 percent of those royalties were from the license with BMS 

(www.techtransfer.fsu.edu/tts.html, downloaded June 3, 2003). This represents about 4.2 

percent of Taxol’s total worldwide sales in calendar year 2000. 

NIH Invested Heavily 

in Taxol-Related 

Research, but Federal 

Financial Benefits 

Have Been Limited 
Page 14 GAO-03-829 Technology Transfer in Taxol Development 

Based on figures provided by NIH of its yearly expenditures for all 

research involving paclitaxel, we estimate that NIH spent $183 million on 

paclitaxel-related research from 1977 through 1997, the end of the 

CRADA’s term. 18 NIH officials told us that these figures reflect all NIH 

research using paclitaxel—even when it is given to patients as the 

standard of care in studies of other remedies—not just research 

investigating paclitaxel and Taxol. This figure includes spending for 

research on the effectiveness of paclitaxel for conditions other than 

cancer as well as research to develop analogues or alternative compounds 

to paclitaxel to increase the number of available drugs. We estimate NIH 

spent an additional $301 million on paclitaxel-related research from 1998 

through 2002, some of which supported cancer research, bringing NIH’s 

total investment in paclitaxel-related research from 1977 to 2002 to $484 

million. (See fig. 1.) 

Figure 1: NIH’s Funding for Paclitaxel-Related Research 

Note: GAO analysis based on data provided by NIH. 

 18NIH officials told us that NIH could not estimate its paclitaxel-related expenditures for 

years earlier than 1977. 

NIH’s Financial Investment 

in Paclitaxel Increased 

Significantly in the 1990s 

Source: GAO. 

NIH funding for research on paclitaxel

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Dollars in thousands

1977 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02

NIH-BMS license agreement signed

First NIH-BMS CRADA started

First NIH-BMS CRADA ended

Taxol commercialized
Page 15 GAO-03-829 Technology Transfer in Taxol Development 

NIH estimates that its net expenditures to conduct clinical trials that 

supported the 1991 CRADA were $80 million. NIH estimates that it spent 

$96 million to conduct the clinical trials and BMS provided a 

reimbursement of $16 million to offset the costs of the studies. NIH’s 

estimate includes costs incurred during the CRADA and costs associated 

with clinical trials conducted prior to the CRADA, the results of which 

helped BMS obtain FDA approval to market Taxol. Almost all ($15.6 

million) of BMS’s financial support was paid to offset clinical trial costs 

during the last several years of the CRADA. In addition, we estimate the 

paclitaxel BMS supplied to NIH under the CRADA had a value of 

$92 million (based on FSS prices).19

NIH’s financial benefits from the collaboration with BMS have not been 

great in comparison with BMS’s revenue from the drug. In 1996, when 

BMS licensed from NIH three patents on methods for using Taxol in 

cancer treatment, it negotiated its first and only license agreement with 

NIH for Taxol, requiring BMS to pay royalties to NIH at a rate of 0.5 

percent of its worldwide sales of Taxol. The NIH-BMS license agreement 

resulted in about $35 million in royalties for NIH through 2002.20 NIH 

reports that 10 individual inventors received 22 percent of the total $35.3 

million in royalty payments, or an aggregated amount of $7.7 million, while 

NIH kept the remainder, $27.5 million.21

Worldwide Taxol sales totaled over $9 billion from 1993 through 2002. 

Sales exceeded $1 billion annually from 1998 through 2001 (see table 1). 

BMS officials told us that the company invested over $1 billion toward the 

development of Taxol since signing the CRADA in January 1991.22 Costs 

included supporting clinical trials (including its payments to NIH), 

 19FSS prices represent the prices at which some federal programs can purchase Taxol. NIH 

estimated that the paclitaxel supplied by BMS had a value of $151 million based on average 

wholesale prices, which are generally higher than FSS prices. 

20From 1996 through 2002, NIH’s total royalty income from all its licensed inventions was 

$296 million. 

21NIH distributes royalty income in accordance with federal law and NIH policy. The 

inventors’ share of royalties varied from year to year, based on BMS’s sales per year. The 

income remaining after the inventors’ share went to NCI. 

22A recent analysis estimated that the average out-of-pocket cost of developing a new drug 

was $543 million (in 2000 dollars). See J.A. DiMasi, R.W. Hansen, and H.G. Grabowski, “The 

Price of Innovation: New Estimates of Drug Development Costs,” Journal of Health 

Economics, vol. 22 (2003). 

NIH Has Received about 

$35 Million in Royalties on 

Taxol Sales 
Page 16 GAO-03-829 Technology Transfer in Taxol Development 

preparing the NDA, and finding alternative sources of the compound 

through yew cultivation and research on the semisynthesis process and 

plant cell culture techniques. For example, BMS officials told us that the 

company’s clinical trials had enrolled over 21,000 patients by 1997. 

Table 1: BMS’s Worldwide Taxol Sales, 1993-2002 

Year Total sales in dollars 

1993 162,000,000 

1994 344,000,000 

1995 580,000,000 

1996 813,000,000 

1997 941,000,000 

1998 1,204,000,000 

1999 1,453,000,000 

2000 1,561,000,000 

2001 1,112,000,000a

2002 857,000,000 

Total 9,027,000,000 

Source: BMS. 

a

Taxol sales decreased after 2000, in part, because the first generic version of paclitaxel was 

released to the marketplace in late 2000. 

At the time the 1991 CRADA was negotiated, NIH had a reasonable pricing 

policy that there should be “a reasonable relationship between the pricing 

of a licensed product, the public investment in that product, and the health 

and safety needs of the public.”23 NIH’s standard reasonable pricing clause 

was modified in the 1991 CRADA. The CRADA noted NIH’s concern that 

“there be a reasonable relationship between the pricing of Taxol, the 

public investment in Taxol research and development, and the health and 

safety needs of the public.” BMS agreed in the 1991 CRADA that these 

factors would be taken into account in establishing a fair market price. 

However, the 1991 CRADA did not require that reasonable evidence be 

 23Shortly after introducing the policy of “reasonable pricing,” industry objected, considering 

it a form of price control, and many companies withdrew from further interaction with 

NIH. According to NIH, this ultimately created a barrier to expanded research 

relationships. The policy was revoked by NIH in 1995. 

1991 CRADA Did Not 

Require Evidence That 

Taxol Would Be 

Reasonably Priced 
Page 17 GAO-03-829 Technology Transfer in Taxol Development 

presented to show that this would occur.24 In its comments on a draft of 

this report, NIH stated it gathered other evidence to reach its conclusion 

that the price of Taxol was reasonable. NIH also entered into a CRADA 

with another company to develop a product that could provide 

competition for Taxol (see CRADA 148 in app. II). This alternative 

product, Taxotere (docetaxel), received its first marketing approval from 

FDA in 1996. 

The federal government, primarily through Medicare, has been a major 

payer for Taxol. Medicare payments for Taxol totaled $687 million from 

1994 through 1999, the last full year of marketing exclusivity for Taxol. 

Medicare payments for Taxol were $202 million in 1999, accounting for 

more than one-fifth of Taxol’s total domestic sales. Medicare’s payments 

reflect, in part, the price it pays for Taxol. Compared to other federal 

programs, Medicare pays relatively more for Taxol than it does for other 

widely used cancer drugs. To assess the pricing of Taxol, we reviewed the 

price Medicare pays for Taxol and other cancer drugs compared to the 

prices paid by federal programs that directly procure these drugs.25 We 

found that in the fourth quarter of 2002, Medicare paid 6.6 times the price 

these other federal programs paid for Taxol, while it paid an average of 3.0 

times the price these other federal programs paid for other widely used 

cancer drugs.26

 24HHS-OIG, Technology Transfer and the Public Interest: Cooperative Research and 

Development Agreements at NIH, OEI-01-92-01100 (Washington, D.C.: November 1993). 

25Federal agencies that directly procure pharmaceuticals have access to the FSS. Medicare 

does not purchase cancer drugs directly, but instead pays providers for cancer drugs that 

they have purchased. FSS prices are negotiated and are based on the actual best prices 

manufacturers charge some of their customers. Manufacturers must also sell brand-name 

drugs listed on the FSS to four federal drug purchasers—the Department of Veterans 

Affairs, the Department of Defense, the Public Health Service, and the Coast Guard—at a 

price at least 24 percent lower than the nonfederal average manufacturer price, a ceiling 

price that is lower than the FSS price for many drugs. Medicare payments are determined 

by the average wholesale price (AWP), a number reported by manufacturers. AWP often 

considerably exceeds the price a manufacturer actually receives for a drug. See U.S. 

General Accounting Office, Medicare: Payments for Covered Outpatient Drugs Exceed 

Providers’ Costs, GAO-01-1118 (Washington, D.C.: Sept. 21, 2001). 

26For this analysis, we examined the FSS and Medicare prices for Taxol and 12 other drugs 

for the treatment of cancer that were identified as among the top 35 drugs for Medicare 

Part B spending in 2001 and 2002 by the Centers for Medicare and Medicaid Services. These 

prices reflect solely drug procurement prices; they do not include any payments for 

administering the drugs. 

Federal Government Is a 

Major Payer for Taxol 
Page 18 GAO-03-829 Technology Transfer in Taxol Development 

Although NIH has broad authority under applicable statutes to negotiate 

CRADAs and license agreements with outside partners, several factors 

affected its exercise of that authority in the technology transfer activities 

related to the development of Taxol. Such negotiations involve a weighing 

of NIH’s goals and priorities with those of a potential partner, recognizing 

that tradeoffs may be necessary to reach an agreement. In the case of 

Taxol, NIH’s ability to exercise its authority was limited because it did not 

have a patent on paclitaxel and because its evaluation found that there 

was a shortage of available, qualified alternative CRADA partners. With 

regard to the license negotiations on the inventions resulting from the 

CRADA, the setting of royalties was affected by the criteria that both NIH 

and BMS used to help guide royalty negotiations. BMS officials told us that 

NIH’s inventions did not contribute to BMS’s successful marketing of 

Taxol. 

One factor affecting NIH’s CRADA negotiating position is its ability to 

offer a potential partner exclusive marketing rights to an invention. In its 

paclitaxel negotiations, NIH’s position was affected by the fact that it did 

not have a patent on paclitaxel.27 As NIH acknowledged in the 1991 

CRADA, because of this NIH was unable to grant any potential partner an 

exclusive patent license to market paclitaxel. NIH was able to offer 

potential partners access to the findings of the research it conducted prior 

to the CRADA and to its research during the term of the CRADA. 

Another factor affecting the leverage that NIH has in negotiating a CRADA 

is the availability of other qualified applicants. If NIH were to be 

dissatisfied with the CRADA negotiations with an applicant, it 

theoretically could turn to another applicant and begin new negotiations, 

accepting the inherent delays. It also could seek multiple CRADA partners, 

recognizing that multiple partners may grant less favorable terms than one 

receiving an exclusive agreement. In the case of paclitaxel, it was 

advantageous for NIH to enter into a CRADA with an industry partner 

qualified to bring paclitaxel to the marketplace and to provide an adequate 

supply of paclitaxel for its work. NIH received four applications from 

potential CRADA partners. Using nine criteria to rank applications, 

including that an applicant have experience with both natural products 

and other drug development and be able to supply adequate amounts of 

 27In its comments on a draft of this report, NIH stated that it could not patent paclitaxel 

because the relevant information about the compound was already in the public domain. 

Several Factors 

Affected NIH’s 

Exercise of Its Broad 

Authority in 

Technology Transfer 

Activities Related to 

the Development of 

Taxol 

NIH’s Negotiating Position 

for the CRADA Was 

Potentially Affected by Its 

Lack of a Patent on 

Paclitaxel and by the 

Shortage of Qualified 

Alternative Partners 
Page 19 GAO-03-829 Technology Transfer in Taxol Development 

the drug as needed for future clinical trials (see app. I), NIH reviewers 

scored the BMS application substantially higher than all of the others. 

While some concerns were raised about the BMS application, greater 

concerns were raised about other applications. For example, the applicant 

that received the second-highest score was cited as having no experience 

in the United States involving natural products and no experience in 

developing pharmaceutical agents in the United States and as providing 

incomplete responses, especially on how it would make Taxol available 

and how much it could supply annually. 

Applicable law does not restrict the royalty rate NIH can negotiate in a 

license agreement, although NIH’s model CRADA at the time of the Taxol 

negotiations suggested that a ceiling be set at 5 to 8 percent. This 

specification has since been removed, and the current model CRADA sets 

no ceiling. By law, NIH is required to offer its CRADA partners the option 

to choose an exclusive license for any inventions that arise from the 

CRADA work.28 NIH is not prohibited from specifying in the CRADA what 

the royalty rate will be, rather than waiting until a subsequent license 

agreement is negotiated. 

When NIH and BMS entered into the license agreement 5 years after the 

1991 CRADA took effect, how the parties viewed the benefits of an 

agreement likely affected the royalty rate negotiations. NIH officials 

indicated that they generally take eight factors into account in negotiating 

royalty rates. These include the stage of product development, the type of 

product, the market value of the product, the uniqueness of the materials, 

the scope of the patent coverage, the market timing, NIH’s contribution to 

the product, and the public health benefit. An NIH OTT official reported 

that the ultimate determination of a royalty rate is not the result of a neat 

formula but is based on a balancing of these factors, with the public health 

benefit receiving the highest consideration. In contrast, BMS officials told 

us that the company considers three factors when negotiating royalty 

rates: scientific risk, coverage, and exclusivity. In the case of Taxol, a BMS 

official reported that the company determined it had high scientific risk 

(i.e., it did not know if the inventions would be successful), narrow 

coverage (i.e., the license was for very specific ways of treating a tumor), 

and a lack of exclusivity (i.e., the treatment regimens BMS licensed would 

not prevent other firms from marketing generic paclitaxel after BMS’s 

 2815 U.S.C. § 3710a(b)(1) (2000). 

License Negotiations 

under the CRADA Resulted 

in Royalty Payments to 

NIH 
Page 20 GAO-03-829 Technology Transfer in Taxol Development 

period of marketing exclusivity expired), all making the inventions less 

valuable. 

In general, NIH’s leverage in negotiating royalty rates is affected by the 

amount of competition for a license. In 2000, NIH’s director of OTT 

testified that the vast majority of NIH inventions require active marketing 

and more often than not only one firm is generally interested in licensing 

any particular type of technology.29 In fiscal year 2000, there were 45 

requests for exclusive licenses, and only 2 technologies had two 

applications for licenses each. For nonexclusive license requests, there 

were 253 requests, and only 31 had more than one application. NIH’s 

director of OTT reported that, at that time, OTT had approximately 2,000 

technologies available for licensing, 30 percent of which had been 

available for more than 5 years. In the case of Taxol, it is not clear whether 

other companies would have been interested in the inventions developed 

out of the CRADA, as BMS had exclusive rights to market paclitaxel at that 

time. 

From the perspectives of NIH and BMS, the 1991 CRADA is an example of 

a successful collaboration between the public and private sectors in 

pharmaceutical technology transfer. Early studies supported by NIH on 

the clinical effectiveness of Taxol and made available to BMS under the 

CRADA were critical to BMS’s success in rapidly commercializing its 

brand-name drug Taxol for the treatment of cancer. The additional 

supplies of the scarce paclitaxel provided by BMS to NIH under the 

CRADA were critical for the expansion of NIH’s research. 

NIH’s goals in the technology transfer process emphasize public health 

benefits over financial considerations. In the case of Taxol, the benefit to 

public health was clearly demonstrated, as there were few treatments for 

women with ovarian or breast cancer when Taxol came on the market. 

However the financial return to NIH was more limited. NIH made a 

substantial investment in the development of Taxol. In return, NIH 

received royalty payments of about $35 million from its license agreement 

with BMS, and received paclitaxel and financial support from BMS for the 

CRADA research. We noted that the federal government has spent over 

half a billion dollars in payments to health care providers for Taxol under 

the Medicare program. In light of the significant federal investment, 

 29Public Citizen v. NIH, at 54. 

Concluding 

Observations 
Page 21 GAO-03-829 Technology Transfer in Taxol Development 

questions remain regarding the extent to which NIH used its broad 

authority in its negotiations with BMS on the royalty payments and the 

price of the drug to obtain the best value for the government. 

We provided a draft of this report to NIH and BMS for their review. In its 

comments, NIH provided us with additional information about its 

expenditures related to the 1991 NIH-BMS CRADA and BMS’s 

contributions to NIH research under the CRADA, and also presented the 

reasons that it did not patent paclitaxel. NIH acknowledged that the 1991 

CRADA did not require that evidence be presented to assure that Taxol 

was reasonably priced; however, NIH states that its analysis of other 

information led it to conclude that Taxol was fairly priced. In response, we 

have incorporated the new information from NIH into the report as 

appropriate. However, we were not able to evaluate the basis for NIH’s 

judgment that Taxol was fairly priced. NIH’s comments are included as 

appendix IV. NIH also provided technical comments, which we have 

incorporated as appropriate. 

In its comments, BMS expressed concern that our estimates of NIH’s 

expenditures for the development of Taxol gave an exaggerated view of 

NIH’s spending. We have revised our presentation of NIH’s spending based 

on additional information contained in NIH’s comments. BMS also 

expressed two concerns about our analysis of the price of Taxol to 

Medicare relative to other cancer drugs. First, BMS suggested that our 

analysis may include payments to physicians for administering the drugs in 

addition to the procurement price of the drugs. However, our analysis 

considered only the prices for drug procurement and did not include 

payments for physician services. Second, BMS suggested that our findings 

may change if our analysis excluded generic drugs and was restricted to 

brand name drugs. However, only 2 of the 12 comparison drugs in our 

analysis are generic drugs and our findings do not change if they are 

excluded. We found that, while Medicare generally pays more for cancer 

drugs than other federal programs that can directly procure 

pharmaceuticals, this price premium for Taxol is greater than average. 

BMS also made technical comments, which we incorporated as 

appropriate. 

As we agreed with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days from the 

date of the report. At that time, we will send it to the Secretary of Health 

and Human Services, the Director of NIH, and others who are interested. 

Agency and BristolMyers Squibb 

Company Comments 

and Our Evaluation 
Page 22 GAO-03-829 Technology Transfer in Taxol Development 

We will make copies available to others upon request. In addition, the 

report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. 

If you or your staff have any questions about this report, please call me at 

(202) 512-7119. Another contact and key contributors are listed in 

appendix V. 

Sincerely yours, 

Marcia Crosse 

Acting Director, Health Care—Public 

 Health and Science Issues 
Appendix I: Selection of “Clinical 

Development of Taxol” CRADA Partner 

Page 23 GAO-03-829 Technology Transfer in Taxol Development 

On August 1, 1989, NIH published a notice in the Federal Register seeking 

a pharmaceutical company that could effectively pursue the clinical 

development of paclitaxel for the treatment of cancer. Included in the 

Federal Register announcement were nine criteria for the selection of the 

CRADA partner: 

• Experience in the development of natural products for clinical use. 

• Experience in preclinical and clinical drug development. 

• Experience in and ability to produce, package, market, and distribute 

pharmaceutical products in the United States and to provide the product 

at a reasonable price, and experience in doing so. 

• Experience in the monitoring, evaluation, and interpretation of the data 

from investigational agent clinical studies under an investigational new 

drug application. 

• Willingness to cooperate with the Public Health Service in the collection, 

evaluation, publication, and maintaining of data from clinical trials of 

investigational agents. 

• A willingness to cost-share in the development of paclitaxel, including the 

acquisition of raw material and isolation or synthesis of paclitaxel in 

adequate amounts as needed for future clinical trials and marketing. 

• Establishment of an aggressive development plan, including appropriate 

milestones and deadlines for preclinical and clinical development. 

• An agreement to be bound by the HHS rules involving human and animal 

subjects. 

• Provision for equitable distribution of patent rights to any inventions. 

NIH’s Taxol CRADA Review Committee met on October 10, 1989, to 

review the applications of the four potential CRADA partners. The 

committee scored BMS’s application substantially higher than all of the 

others, with none of the other applications receiving a higher score than 

BMS on any of the individual criteria. Some of the strengths of the BMS 

application that were discussed were BMS’s extensive experience with 

natural products, its impressive record in the area of production of 

anticancer agents and substantial experience in preclinical drug 

development, and its bearing of financial responsibility for collection of 

the compound and preclinical toxicology studies. Weaknesses discussed 

were pricing and the estimates of available paclitaxel. The applicant 

receiving the second-highest score was cited as having no experience in 

the United States for natural products and no experience in developing 

drugs in the United States. 

Appendix I: Selection of “Clinical 

Development of Taxol” CRADA Partner 
Appendix II: Catalog of CRADAs and License 

Agreements Related to Taxol 

Page 24 GAO-03-829 Technology Transfer in Taxol Development 

NIH has had four CRADAs and one CRADA amendment related to 

paclitaxel (see table 2). Two of the CRADAs and the CRADA amendment 

were with BMS and concerned development of the drug Taxol. One 

CRADA was with Rhône-Poulenc Rorer (now Aventis) and involved 

research on Taxotere, a part of the taxane class of chemotherapy drugs, 

whose original source is the yew tree. It is also a treatment that can help 

destroy cancer cells in the body after previous chemotherapy. An 

additional CRADA, which is ongoing, is with Angiotech and the Johns 

Hopkins University and involves the use of paclitaxel to coat stents used in 

angioplasty. 

Table 2: CRADAs Related to Taxol 

CRADA number Title Partners Active dates

64 Clinical Development of 

Taxol 

NCI and BMS 1/23/91 to 12/31/97

97 (amendment 

to 64) 

Clinical Development of 

Taxol: Studies on 

Mechanisms of Action 

and Resistance, 

Identification of Analogs 

Active in Resistant Cell 

Lines 

NCI and BMS 7/17/95 to 12/31/97

686 Taxol: Studies on the 

Mechanisms of Action 

and Resistance 

NCI and BMS 6/9/98 to 6/9/01

148 CRADA for the Clinical 

Development of 

Taxotere 

NCI and RhônePoulenc Rorer 5/14/92 

to 3/1/00

363 Use of Paclitaxel and 

Microtubule-Stabilizing 

Agents for the 

Prevention of Restenosis 

NIH, Angiotech, 

and the Johns 

Hopkins University 

Currently active

Source: NIH. 

Although paclitaxel itself has not been patented, methods of 

administration of the drug have been patented. There are a few patents 

pertaining to paclitaxel (see table 3). The government has an interest in 

three of these patents: 5496804, 5496846, and 6150398. Patent 5496804 is 

for a method for treating paclitaxel side effects with G-CSF (granulocyte 

colony-stimulating factor); patent 5496846 is a method for using paclitaxel 

in a 96-hour infusion for breast cancer; and patent 6150398 is for a method 

of treating cancer by administration of paclitaxel and a DNA cross-linking 

antineoplastic agent (cisplatin). Patents 5641803 and 5670537 are held by 

BMS solely. One is a method for administering Taxol over 3 hours, and the 

Appendix II: Catalog of CRADAs and License 

Agreements Related to Taxol 
Appendix II: Catalog of CRADAs and License 

Agreements Related to Taxol 

Page 25 GAO-03-829 Technology Transfer in Taxol Development 

other is for a method of effecting tumor regression with a low-dose, shortinfusion Taxol regimen. 

Table 3: Patents Related to Taxol 

Patent 

number Title Assignee 

Date 

approved

5496804 Method for Treating Taxol Side 

Effects with G-CSF 

Department of 

Health and Human 

Services 

3/5/1996 

5496846 Taxol Treatment of Breast Cancer Department of 

Health and Human 

Services 

3/5/1996 

5641803 Methods for Administration of Taxol Bristol-Myers 

Squibb Co. 

6/24/1997 

5670537 Method for Effecting Tumor 

Regression with a Low-Dose, ShortInfusion Taxol Regimen 

Bristol-Myers 

Squibb Co. 

9/23/1997 

6150398 Methods for the Treatment of Cancer Department of 

Health and Human 

Services 

11/21/2000

Source: U.S. Patent and Trademark Office. 

NIH has one exclusive patent license agreement with BMS that resulted 

from CRADA 64, “Clinical Development of Taxol.” This license agreement 

covers three patents: 5496804, 5496846, and 6150398. 

In addition, BMS and FSU established a major license agreement 

concerning the semisynthetic production of Taxol. Other NIH CRADAs 

involving the other industry partners (i.e., Rhône-Poulenc Rorer, 

Angiotech, and the Johns Hopkins University) did not result in any 

patented inventions or license agreements. 
Appendix III: Chronology of the Research and 

Development of Taxol (Paclitaxel) 

Page 26 GAO-03-829 Technology Transfer in Taxol Development 

• The National Cancer Institute (NCI) initiates the Natural Products 

Program to screen 35,000 plant species for anticancer activity. 

• Researchers at Research Triangle Institute in North Carolina find that an 

extract from the bark of the Pacific yew tree has antitumor activity. 

• Researchers at Research Triangle Institute identify compound 17—

paclitaxel—the active ingredient in the Pacific yew tree. 

• Researchers at Albert Einstein College of Medicine discover how 

paclitaxel works to prevent cell division, by means of a mechanism called 

tubulin stabilization. 

• Stevenson-Wydler Technology Innovation Act and Bayh-Dole Act enacted. 

• NCI files an investigational new drug application (IND) to initiate clinical 

trials of paclitaxel. IND is approved, and phase 1 clinical trials begin. 

• NCI begins phase 2 clinical trials. 

• Federal Technology Transfer Act enacted. 

• Hauser Chemical becomes contractor to NIH, collecting yew tree bark and 

manufacturing paclitaxel. 

• Researchers at Florida State University (FSU), funded by NIH, patent a 

process for the semisynthesis of Taxol. 

• NCI publishes a Federal Register announcement petitioning 

pharmaceutical companies to compete for the right to develop paclitaxel. 

Four companies, including Bristol-Myers Squibb (BMS), apply. 

• FSU and BMS sign a license agreement for BMS’s use of the semisynthesis 

process. 

Appendix III: Chronology of the Research 

and Development of Taxol (Paclitaxel) 

1958 

1963 

1971 

1979 

1980 

1983 

1985 

1986 

1987 

1989 

1990 
Appendix III: Chronology of the Research and 

Development of Taxol (Paclitaxel) 

Page 27 GAO-03-829 Technology Transfer in Taxol Development 

• NCI signs CRADA with BMS for the clinical development of paclitaxel. 

• U.S. Patent and Trademark Office approves BMS’s application to 

trademark the name Taxol. 

• BMS files a new drug application (NDA) with FDA for use of Taxol to treat 

ovarian cancer. 

• BMS obtains FDA approval in December for treatment of patients with 

metastatic carcinoma of the ovary after failure of first-line or subsequent 

therapy. 

• Pacific Yew Act enacted (Pub. L. No. 102-335, 106 Stat. 859). 

• BMS introduces Taxol into the marketplace for treatment of ovarian 

cancer. 

• BMS files supplemental NDAs with the FDA, one for further defining the 

optimal dose and schedule of the administration of Taxol, another for use 

of paclitaxel as a secondary therapy for breast cancer. 

• BMS obtains FDA approval in April for treatment of breast cancer after 

failure of combination chemotherapy for metastatic disease or relapse 

within 6 months of adjuvant chemotherapy. Prior therapy should have 

included an anthracycline unless clinically contraindicated. 

• BMS obtains FDA approval in June for new dosing regimen for patients 

who have failed initial or subsequent chemotherapy for metastatic 

carcinoma of the ovary. 

• FDA approves supplemental NDA for semisynthetic production of Taxol 

by using the process developed by FSU. 

• NCI and BMS CRADA extended through December 1997. 

• NIH is awarded patents for Taxol Treatment of Breast Cancer and Method 

for Treating Taxol Side Effects with G-CSF. 

• NIH and BMS sign license agreement, whereby NIH provides BMS with 

exclusive rights to three NCI inventions involving Taxol. BMS is required 

to provide NIH with royalty payments and research support, and meet 

benchmarks for the clinical development of Taxol. 

• NIH begins to receive royalty payments from BMS. 

1991 

1992 

1993 

1994 

1996 
Appendix III: Chronology of the Research and 

Development of Taxol (Paclitaxel) 

Page 28 GAO-03-829 Technology Transfer in Taxol Development 

• BMS obtains FDA approval in August for second-line therapy for AIDSrelated Kaposi’s sarcoma. 

• Other drug companies begin developing generic versions of paclitaxel and 

file NDAs and abbreviated new drug applications with FDA. 

• BMS obtains FDA approval in April for first-line therapy for the treatment 

of advanced carcinoma of the ovary in combination with cisplatin. 

• BMS obtains FDA approval in June for use of Taxol injection, in 

combination with cisplatin, for the first-line treatment of non-small-cell 

lung cancer in patients who are not candidates for potentially curative 

surgery and/or radiation therapy. 

• BMS obtains FDA approval in October for adjuvant treatment of nodepositive breast cancer administered sequentially to standard doxorubicincontaining combination chemotherapy. 

• First generic version of paclitaxel approved in September. 

• Generic versions of paclitaxel enter the marketplace. 

• BMS obtains FDA approval in June for new dosing regimen for the firstline treatment of advanced ovarian cancer: every 3 weeks at a dose of 175 

milligrams per square meter of body surface followed by cisplatin at a 

dose of 75 mg/m2

. 

1997 

1998 

1999 

2000 

2002 
Appendix IV: Comments from the National Institutes of Health 

Page 29 GAO-03-829 Technology Transfer in Taxol Development 

Appendix IV: Comments from the National 

Institutes of Health 
Appendix IV: Comments from the National Institutes of Health 

Page 30 GAO-03-829 Technology Transfer in Taxol Development 
Appendix IV: Comments from the National Institutes of Health 

Page 31 GAO-03-829 Technology Transfer in Taxol Development 
Appendix IV: Comments from the National Institutes of Health 

Page 32 GAO-03-829 Technology Transfer in Taxol Development 
Appendix IV: Comments from the National Institutes of Health 

Page 33 GAO-03-829 Technology Transfer in Taxol Development 
Appendix IV: Comments from the National Institutes of Health 

Page 34 GAO-03-829 Technology Transfer in Taxol Development 
Appendix V: GAO Contact and Staff 

Acknowledgments 

Page 35 GAO-03-829 Technology Transfer in Taxol Development 

Martin T. Gahart, (202) 512-3596 

Other key contributors to this report are Helen Desaulniers, Anne Dievler, 

Julian Klazkin, Carolyn Feis Korman, Carolina Morgan, and Roseanne 

Price. 

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Acknowledgments 

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